The last payment that Andrew Rayburn owed his ex-wife was to be the end of their divorce proceedings.

The Streetsboro businessman didn't know it, but his $12.5 million withdrawal from an investment account in October also hastened the end of stockbroker Frank Gruttadauria's investment scam.

Gruttadauria had already looted or lost nearly $70 million from Rayburn's account when the disbursement request came, investigators now say, and there wasn't anywhere near $12.5 million left.

If Rayburn found out, Gruttadauria's jig would be up. So, sources within the investigation say, Gruttadauria scared the money up by pillaging his other clients' accounts and transferring money to Rayburn's.

He hit some accounts he had never tapped before. And within a month, a few of his clients saw transfers on their statements and started asking questions.

"It was the beginning of the end," said one person close to the case.

On Jan. 11, Gruttadauria disappeared with his passport, leaving a letter to the FBI admitting that he defrauded at least some of his 300 clients.

His confessed 15-year pattern of misappropriation of their money had hit the rocks more than a year earlier, when the stocks he stuffed into their portfolios went into a nose-dive, authorities and lawyers for investors said.

He lost tens of millions of dollars on risky investments that plummeted in value in 2000 and 2001. They believe Gruttadauria also stole money for his own use, something he flatly denied in his letter to the FBI.

Rayburn, the former president of Flexalloy Inc. in Streetsboro, sold his family firm a few years ago and entrusted his fortune to Gruttadauria. The settlement of his 1997 divorce laid out a schedule for paying his wife $15 million, with the $12.5 million balloon payment due in October wrapping it up.

His account records, which he didn't know were bogus, reflected a balance of about $120 million.

Actually, he was among roughly 25 investors who believe they lost up to $300 million in investments and gains they thought they had, according to investigators.

In an interview yesterday, Rayburn declined to discuss his overall losses but acknowledged that the $12.5 million came out of brokerage accounts controlled by Gruttadauria.

Investigators have characterized Gruttadauria's fraud as a giant shell game, in which he transferred client money into accounts he controlled under fictitious names. Whenever a client needed a withdrawal from an account that was empty, Gruttadauria would transfer money from someone else's account.

Investigators and clients' lawyers said he siphoned money from clients such as Rayburn through secret accounts at National City Bank and Lehman and that the key account was one he controlled under the name D.H. Strategic Partners Inc. Authorities believe that D.H., formed in 1996, was merely a shell company.

"He used fake letters of authorization to transfer money out of one of my client's accounts and into D.H.," said Gerald Messerman, Rayburn's lawyer.

Messerman said he has seen those bogus letters that enabled Gruttadauria to divert "substantial amounts" in 2000 and 2001. He declined to provide a figure, however.

The U.S. Securities and Exchange Commission, a federal grand jury and other authorities are looking into D.H., suspicious that it had no function other than as a shell corporation that Gruttadauria used to drain the accounts of his clients.

In addition, D.H. company records are among the documents the FBI has asked Gruttadauria's accountant, Joseph DeGrandis Jr., to supply, according to the accountant's lawyer.

DeGrandis is also the president of D.H. - the company's only officer listed with the Ohio Department of Taxation.

"In hindsight - now, because of what D.H. did - it looks very unusual," said Ralph Cascarilla, the lawyer for DeGrandis. "But he did it as an accommodation because Frank asked him to. You need officers to function."

DeGrandis replaced Gruttadauria's cousin, Anthony C. LaPlaca, as the company's agent when LaPlaca resigned in August 2000, records show. LaPlaca, who also had been a corporate officer, said yesterday that he resigned as statutory agent for that company and others when he left private law practice.

"I had no involvement with that company," LaPlaca said of D.H.

Sources say LaPlaca and several members of his family invested with Gruttadauria and lost.

DeGrandis received reports about D.H.'s gains and losses at the end of the year for tax preparation but had nothing to do with the D.H. account at National City, said Cascarilla.

National City spokesman Tom Koch declined to comment.

DeGrandis' office on Superior Avenue was also one of at least three addresses to which Lehman's corporate offices mailed copies of Gruttadauria's clients' genuine account statements.

Some investigators and clients' lawyers say Gruttadauria used that address, a post-office box and a third address to hide legitimate statements from pillaged clients. But DeGrandis' lawyer said yesterday that there were legitimate reasons for DeGrandis to get the statements. The accountant worked for some of Gruttadauria's clients, his lawyer said, and the statements he received would not raise red flags about drained account balances because DeGrandis knew nothing about inflated fake statements. Tax documents DeGrandis received squared with the statements he got, his lawyer said.

A downtown Cleveland lawyer whose office was a third address for the statements denied any knowledge of Gruttadauria's scheme yesterday. He said he has done legal work, including estate planning, for at least a couple of Gruttadauria's clients. The law office routinely receives duplicates of client account statements.

"We get duplicate statements for our files from every brokerage in town," he said. The lawyer said he was unaware the statements differed from his clients', and never talked with clients about their investments because he serves only as their estate-planning attorney.

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